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Topic: Tax on income earned outside of UK  (Read 1388 times)

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Tax on income earned outside of UK
« on: January 04, 2008, 11:08:08 AM »
I'm a US citizen living in UK.  In 2008 my UK employer sent me abroad - 2 months in India and 3 weeks in Texas (as well as Paid Time-off which i spent abroad as well).  I received pay for that time into my UK current account.  Would I be able to claim back the UK taxes paid on that income?

Thanks,
Stefan


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Re: Tax on income earned outside of UK
« Reply #1 on: January 04, 2008, 03:28:03 PM »
Only if your residency status is "Resident but Not Ordinarily Resident".  I suspect you are Ordinarily Resident, which means you can not claim offshore workdays as a deduction. 

On your US return, you still get to claim all the foreign workdays on 2555 and 1116.  You can even claim the Texas workdays as foreign source if you make a treaty claim.
Liz Z i t z o w, EA
British American Tax


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Re: Tax on income earned outside of UK
« Reply #2 on: January 04, 2008, 04:00:44 PM »
I came to the UK 18 months ago with the intent of staying here less than 3 years.  That "intent" still holds true.  In that case, would I not be considered "not ordinarily resident" ?

Thank


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Re: Tax on income earned outside of UK
« Reply #3 on: January 05, 2008, 06:38:08 AM »
If your intent was to remain here three years or less, you are probably Not Ordinarily Resident. 

In that case...

1)  Your India & US workdays are exempt from UK tax, provided the pay for those workdays was not remitted to the UK.  This means that your bank account where you deposited your paycheque was not located physically in the UK.

2)  India would not tax you as you were not there long enough.

3)  The US will tax you on the Texas workdays.  You probably can not make a treaty claim to treat the US workdays as UK workdays. 

To give a more definitive answer, I would need to know more about your particular situation than a wise person would ever post on an open forum.
Liz Z i t z o w, EA
British American Tax


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Re: Tax on income earned outside of UK
« Reply #4 on: January 05, 2008, 10:06:37 AM »
Thanks Lizzit!  I think the location of the bank is where i fail.  I get my cheque directly deposited into a UK current account (citibank), which would disqualify me from claiming the tax back.


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Re: Tax on income earned outside of UK
« Reply #5 on: January 06, 2008, 09:55:31 AM »
The good news in having remitted this income to the UK is that you get to treat the income related to the Texas workdays as foreign source (not US source) on your US tax return (provided you make a treaty claim on your US tax return), so you can minimise what you owe the IRS.


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